Belize's banks continue to be under major pressure, and now it's affecting the business sector. The pressure is rising because presently there is only one bank with a correspondent banking relationship, and that's Scotiabank. So any business which needs to pay an international creditor, or receive payment by foreign currency cheque or wire transfer has to leave their regular bank and funnel it through Scotia. It's sure to cause a bottleneck, and Scotia has its own international standards and corporate culture, which isn't a match for every business - it does not, for example, have a good track record in the productive sector. And then there's the free zone, where all business has to be transacted in US dollars - but now, both the Belize Bank and the Atlantic Bank are being forced to shutter their operations in the zone - because they have lost their correspondent banking relationships. So with only one bank in the entire country which can freely do international transactions - it's a precarious position - and the entire economy is held in the balance. Today, we asked the Prime Minister and Minister of Finance about this near crisis situation:...
Hon. Dean Barrow, Prime Minister
"I've met with the US Ambassador, our Ambassador in Washington is trying to secure me appointments with the state department, with the US Treasury, with the World Bank - with two regulators; the FDIC and the Office of the Controller of the Currency. One of our difficulties is that a part from the tier one banks, smaller banks, community banks, state banks. In the case of credit card settlements, it's a community bank that has agreed to do that for Belize Bank and for Heritage after the corresponding banking relationship was cut off by Bank of America. That bank has now indicated that by the middle of next month it is looking to discontinue even that sort of less comprehensive relationship. So even the question of the credit card settlements, is now in some jeopardy. That's one of the reasons that I want to talk to both FDIC and the Office of the Controller of the Currency, because those are regulatory agencies for the state banks and for the small community banks."
Daniel Ortiz
"Sir, would you describe it as a crisis? Because the person we've talk to - that's the way they describe it that this is a big problem for them that the correspondence banking relationships are coming to a complete close."
Hon. Dean Barrow, Prime Minister
"Well it is potentially a crisis. In fact, I don't want to overstate things but if we don't find a solution one way or another, it is going to be a huge crisis. We are not quite there yet. I hope that my visit to Washington will pay some dividends, although when I had raised it with the President and he had express his willingness to try and have the US help us find a solution - nothing has happened."
For context we should note that the loss of correspondent banking relationships is a region wide problem in Central America and the Caribbean. The source of the problem is the US Treasury Department and its new measures designed to curb money laundering and the financing of terrorism, known as "AML/CFT."
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